How Monero privacy really works, in plain words

On Bitcoin, anyone can follow coins from address to address and read every amount. Monero was designed so the chain tells an outside observer almost nothing. It does this with three ideas that work together.

Stealth addresses hide the receiver

When someone pays your Monero address, the coins do not land at that address on the chain. The sender creates a one time address for that specific payment. Only your wallet can recognize that it belongs to you. Two payments to the same published address look completely unrelated on the chain.

Ring signatures hide the sender

When you spend, your wallet mixes your real output with fifteen others pulled from the chain, forming a ring of sixteen. The signature proves that one of them is being spent without revealing which. An observer sees sixteen possible sources, not one.

RingCT hides the amount

Amounts are encrypted. The network can still verify that no money was created out of thin air, because the math checks that inputs equal outputs, but nobody watching knows how much moved.

What Monero cannot hide

• Your IP address, unless your wallet connects through Tor or i2p, or you run your own node.
• Your exchange account, if you bought XMR somewhere that knows your name.
• Your habits, like always moving the same amount at the same time.

That last point is where swaps fit in. Swapping to Monero from a wallet you control, into a fresh subaddress, keeps your Monero history out of an exchange's database. See BTC to XMR or the Monero page.